Connaught shares dive on 'material loss' alert

SHARES in beleaguered social housing company Connaught sank to an all-time low yesterday as its chairman warned of a "material loss" in this year's results.

The repair and maintenance specialist has been in turmoil since its June warning that UK government spending cuts could blow a 200 million hole in revenues over this year and next.

Chairman Sir Roy Gardner said earnings before interest and tax would plunge heavily into the red this year - but Connaught is also making provisions for further losses on contracts and taking "significant write-downs" across the business.

The losses come even before the impact of the independent review of accounting policies on mobilisation costs for contracts - currently recognised over the lifespan of deals rather than up front. This is likely to lead to more red ink in the accounts.

The stock fell as low as 10p, valuing the company at just 14m and marking the lowest level since it floated in 1998.

The shares recovered slightly from their headlong dive, but still closed down 13.5p or 47 per cent at 15.5p, having lost more than 90 per cent of their value since the crisis emerged, a few days after Chancellor George Osborne's emergency Budget.

Gardner has drafted in four new directors, including the former finance chief at British Energy and WS Atkins, to help salvage the business, and last week secured breathing space from lenders, led by Royal Bank of Scotland, with a 15m short-term loan.